Excise Taxation to Preserve Health and to Protect the Environment: A Review

26 Pages Posted: 29 Mar 2023

See all articles by Sijbren Cnossen

Sijbren Cnossen

CPB Netherlands Bureau of Economic Policy Analysis

Date Written: February 1, 2023


Excise duties continue to be coveted sources of revenue, particularly in developing countries, because they are easy to collect and cause few economic distortions. In developed economies, on the other hand, excise duties are increasingly considered useful instruments for enhancing social and market outcomes by internalizing the financial, physical, and psychological costs that abusive consumers and producers impose on other people (that is, external costs) and, unintentionally, on themselves (that is, internal costs). By internalizing these costs in the price of goods and thereby confronting consumers with the true cost of consumption, excise duties on tobacco, alcohol, sugar, and gambling can induce these consumers to preserve the quality of their health. Similarly, excise duties on carbon, cement, transport, and plastics can correct for the human-induced degradation of the environment. In this paper, the author identifies the revenue-raising and externality- and internality-correcting features of excise taxation and reviews, in this context, some of the main developments and issues encountered in subjecting particular excisable goods and services to excise taxation.

Keywords: Excise Taxes, External Effect, Revenue, Social Issues, Tax Administration, Tax Policy

Suggested Citation

Cnossen, Sijbren, Excise Taxation to Preserve Health and to Protect the Environment: A Review (February 1, 2023). Canadian Tax Journal/Revue fiscale canadienne, Vol. 70 (supp.), 2022, pp 159-84, Available at SSRN: https://ssrn.com/abstract=4401102

Sijbren Cnossen (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR

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